Financial Performance and the Strategic Profit Model Benchmarking Chain Store Age’s Top 100

Percent Gross Margins Chico's1,7131,5821,714 Cost of good sold Gross profit96056%81952%96957% Kohl's17,17816,38916,474 Cost of merchandise10,680 10,334 10,459 Gross margin6,49838%6,05537%6,01537% Best Buy49,69445,01540,023 Cost of good sold37,534 34,017 30,477 Gross profit12,16024%10,99824%9,54624% Bed, Bath & Beyond7,8297,2087,049 Cost of sales4,621 4,335 4,124 Gross profit3,20841%2,87340%2,92541%

Inventory Turnover Chico's Cost of good sold Inventories |Turnover Kohl's Cost of merchandise10,68010,33410,459 Inventories |Turnover2, , , Best Buy Cost of good sold37,53434,01730,477 Inventories |Turnover5, , , Bed, Bath & Beyond Cost of sales4,6214,3354,124 Inventories |Turnover1, , ,6172.6

GMROI Chico's Gross profit`96056%81952%96957% Inventories |GMROI139$ $ $6.72 Kohl's Gross margin6,49838%6,05537%6,01537% Inventories |GMROI2,923$2.222,799$2.162,856$2.11 Best Buy Gross profit12,16024%10,99824%9,54624% Inventories |GMROI5,486$2.224,753$2.314,708$2.03 Bed, Bath & Beyond Gross profit3,20841%2,87340%2,92541% Inventories |GMROI1,760$1.821,642$1.751,617$1.81

Strategic Profit Model Three major routes to success: Attention to margin: Attention to assets: Do they lead to sales? Leverage: Use of equity versus debt financing?

Return on Net Worth = Return on Assets Profit Margin Asset Turnover Financial Leverage Strategic Profit Model  

Net Income, Profit Margin Chico's Net income704.1% %895.2% Net sales1,7131,5821,714 Kohl's Net income9915.8%8855.4%1,0846.6% Net sales17,17816,38916,474 Best Buy Net earnings1,3172.7%1,0032.2%1,4073.5% Net sales49,69445,01540,023 Bed, Bath & Beyond Net earnings6007.7%4255.9%5638.0% Net sales7,8297,2087,049

Asset Turnover Net Sales / Total Assets Comparable to Inventory Turnover An indication of how closely the assets of retailer track with sales Inventory should be the number one asset of a retailer Real estate, fixtures, distribution centers

Asset Turnover Chico's Net sales1,713 1,582 1,714 Total assets1, , , Kohl's Net sales17,178 16,389 16,474 Total assets13, , , Best Buy Net sales49,694 45,015 40,023 Total assets18, , , Bed, Bath & Beyond Net sales7,829 7,208 7,049 Total assets5, , ,8441.8

Return on Assets Strategic Profit Model “Key Component” Net profits / Total Assets Key measure for comparisons across retailers An indication of how closely the assets of retailer track with net income

Return on Assets Chico's Net income 704.1% %895.2% Total assets|ROA 1,3195.3%1, %1,2507.1% Kohl's Net income %8855.4%1,0846.6% Total assets|ROA 13,1607.5%11,3637.8%10, % Best Buy Net earnings 1,3172.7%1,0032.2%1,4073.5% Total assets|ROA 18,3027.2%15,8266.3%12, % Bed, Bath & Beyond Net earnings %4255.9%5638.0% Total assets|ROA 5, %4, %3, %

Leverage: Total Assets/Net Worth Net worth=Assets minus Liabilities Net worth=Shareholder Equity Ratio illustrating the use of debt by the retailer. Provides a measure of market assessment of the risk of the operation. The higher the ratio of leverage, the less risk in the assets The higher the proportion of apparel in inventory, the lower ratio of financial leverage.

Financial Leverage Chico's Total assets 1,250 1, Shareholder equity Kohl's Total assets 10,560 9,034 9,146 Shareholder equity 6, , , Best Buy Total assets 12,758 13,570 11,864 Shareholders' equity 4, , , Bed, Bath & Beyond Total assets 3,844 3,959 3,382 Shareholders' equity 2, , ,2621.5

Return on Net Worth Return on shareholder equity, or owners’ equity Comparison that can be used across public company, as well as across retailers RONW = Return on Assets x Leverage RONW = Net Earnings / Shareholder Equity

Return on Net Worth (RONW) Chico's Total assets|ROA 1,3195.3%1, %1,2507.1% Net worth| RONW % %9139.7% Kohl's Total assets|ROA 18,3027.2%15,8266.3%12, % Net worth| RONW 7, %6, %6, % Best Buy Total assets|ROA 18,3027.2%15,8266.3%12, % Net worth| RONW 6, %5, %4, % Bed, Bath & Beyond Total assets|ROA 5, %4, %3, % Net worth| RONW 3, %3, %2, %

Days Payable Indication of how long a firms taking (on average) to pay bills, or comparison of how it’s using suppliers to finance inventory.